Above: Kingston

By the Caribbean Journal staff

Standard & Poor’s has maintained its negative outlook for Jamaica, while affirming its “B-/B” long and short-term sovereign credit ratings on the country, the ratings firm announced.

“Our ratings on Jamaica reflect its high general government debt and interest burden; limited fiscal, monetary and external flexibility; and low growth prospects,” said Joydeep Mukherji, a credit analyst at Standard and Poor’s. “They also reflect the country’s political stability and relatively developed domestic capital markets.”

The outlook also reflects the country’s “low growth prospects,” with the economy reportedly set to expand by 1 percent or less this year, according to S&P.

Jamaica’s general government debt burden was 126 percent of GDP in 2011, and Mukherji said the firm expected it to remain at a similar level in 2013.

“The negative outlook incorporates our expectation that the government will continue to rely on the domestic capital marekt, multilateral funding and possible international issuances to finance its fiscal and external gap in the short term,” he said. “We also expect that the government will take additional measures in case lower-than-expected GDP growth or higher-than-expected increases in the public-sector salary bill threaten to undermine its budget targets for the current fiscal year.”

S&P said a “prolonged” loss of foreign exchange reserves could weaken investor confidence, and raise the risk of greater exchange rate volatility.

“If the government fails to stabilize Jamaica’s external account, the resulting further loss of external liquidity would likely lead to a lower rating,” he said.

Conversely, the firm also said it could raise Jamaica’s outlook to stable if it can “staunch the recent loss of external liquidity,” along with presenting a credible medium-term economic plan.